Life After FTX: Bankman-Fried’s Employees Struggle to Move On

A few weeks after FTX collapsed, Natalie Tien started crying in a New York City grocery store.

She was still in disbelief that the phenomenally successful crypto exchange where she had worked, often putting in 16-hour days, had imploded overnight. Its team of young, idealistic employees in the Bahamas had scattered. Her old boss, Sam Bankman-Fried, was facing a criminal investigation. Much of her net worth—at least $500,000 in FTX shares and various cryptocurrencies—had evaporated.

Tien, who led public relations for FTX and was also Bankman-Fried’s executive assistant, felt depressed for months. She attended his trial last fall in a bid for closure. She holds Bankman-Fried responsible for the catastrophic losses to FTX’s customers. But she was saddened when Judge Lewis Kaplan on Thursday sentenced him to 25 years in prison.

“He’s a brilliant person, and his talents could be better used elsewhere,” Tien said.

Former FTX employees have felt a mix of emotions about Bankman-Fried’s odyssey from crypto hero to federal prisoner. Some sympathized with the former FTX chief executive. Others, angry at the harm he caused, said he deserved to be punished.

Above all, FTX employees are still struggling to reconcile their memories of the company with the picture of a multibillion-dollar fraud painted by prosecutors and trial witnesses.

The Justice Department called FTX one of the biggest financial frauds in U.S. history. It accused Bankman-Fried of diverting customer funds to pay for luxury real estate, political donations and risky investments. Three members of his inner circle pleaded guilty to fraud and testified against him. In November, a jury convicted Bankman-Fried of seven counts of fraud and conspiracy.

“It’s like, what the hell was going on? It was not apparent at all from what I was seeing in the office,” said Can Sun, the former general counsel of FTX.

Sun, like the other former employees interviewed for this article, hasn’t been accused of wrongdoing and said he was in the dark about illegal activity at FTX. He said he only pieced together that Bankman-Fried’s crypto hedge fund, Alameda Research, had borrowed FTX customer funds on Nov. 7, 2022.

That day, as FTX was reeling from a flood of customer withdrawals, other FTX executives pulled Sun into a meeting about raising emergency funding, during which he learned that billions of dollars were missing. He later took a walk with Bankman-Fried around his elite Bahamas apartment complex. As they walked, the FTX chief asked if there were potential legal justifications for Alameda’s use of customer funds. Sun offered a few theoretical justifications, but stressed that they weren’t supported by the facts. He resigned the next day.

Sun finds it maddening that Bankman-Fried has never admitted to knowingly misappropriating customer funds, and has characterized the collapse of FTX as a failure of risk management, rather than a crime.

“When this whole thing happened, Sam was never straight with me or anyone else,” Sun said.

A spokesman for Bankman-Fried declined to comment. Speaking in court on Thursday, the former FTX chief apologized to his former colleagues. “I know a lot of people feel really let down, and they were right,” he said at his sentencing hearing.

Within weeks of the collapse of FTX, Sun was on a call with federal prosecutors. He later signed a nonprosecution agreement and testified against Bankman-Fried at the trial. Sun says he did nothing wrong, but agreed to the deal out of an abundance of caution, as he might have unknowingly approved deals involving misappropriated funds.

His ties to FTX initially dogged him as he worked to re-establish his legal career. The general counsel of one big crypto firm refused to meet with Sun, citing his FTX connection. Sun is now head of legal affairs and compliance for Backpack, a startup crypto exchange led by an ex-Alameda employee.

Bankman-Fried should face serious consequences as a deterrent to other white-collar criminals, said Sun, adding that he personally lost about $4 million in FTX’s collapse.

“There was just no need to do any of the things that he did,” Sun said.

Andrew Croghan, a former chief operating officer of Alameda Research, still can’t fathom how the startup he helped create turned into a synonym for fraud. During the trial, he found it surreal to read headlines about his former colleagues testifying about financial crimes.

Croghan joined Alameda in 2018, when it was based in a Berkeley, Calif., office with beanbag chairs and furniture ordered from Amazon.com. He later became FTX’s first head of business development. He left in 2020, but remained friendly with Bankman-Fried and was in talks to return to FTX when it collapsed. The downfall came as a shock.

“This was someone I believed in, someone I trusted,” Croghan said. “So much collateral damage and negativity came out of this.”

Still, Croghan took issue with media depictions of Bankman-Fried as greedy. Whatever illegal acts the FTX chief committed, Croghan said, they were motivated by effective altruism—the philosophical movement that encourages adherents to make big bucks so they can donate more money to charity. Bankman-Fried was a proponent of EA, as the movement is known. So were his fellow executives who pleaded guilty: Gary Wang, Caroline Ellison and Nishad Singh.

“People think he’s your average mustache-twirling villain,” said Croghan, who doesn’t identify as an effective altruist himself. “I don’t think that’s the case…. He could have stolen a lot more money for himself, if that’s what he really wanted to do.”

Tien, the former head of FTX public relations, moved back to her native Taiwan and landed a job as head of communications for a crypto investment firm. In February, she wrote a letter to Judge Kaplan urging a lighter sentence for Bankman-Fried. “The Sam I knew and worked with never acted out of greed or self-interest,” she wrote.

Tien has come to believe that the roots of FTX’s downfall lay in Bankman-Fried’s management style. Over time FTX became increasingly centered on him, and he stopped heeding the advice of others, she recalled. That led to bad decisions.

“It kind of became this one-man company,” Tien said. “Everyone was just really afraid to disobey anything that Sam even hinted at, when he wanted things to go in a certain way. Most people just kept their heads down and followed whatever they were being told. It was pretty toxic.”

If she could go back in time, she’d have one piece of advice for Bankman-Fried: “Stop thinking that you are the smartest person in the company or in the world.”

Write to Alexander Osipovich at [email protected]